Turkish Central Bank lowered one of its key interest rates

Turkish Central Bank lowered one of its key interest rates by 25 basis points to 8.75%. The measure was largely expected, as assumptions and forecasts for even larger decrease of 50 basis points. This is the fifth consecutive decrease in the interest rate on overnight deposits. The other two interest rate – the interest rate on overnight deposits and one-week repo – remained unchanged at levels respectively 7.25% and 7.5%.

“In recent times, the domestic developments led to fluctuations in financial markets. Monetary Policy Committee notes that the measures to support liquidity have eased volatility”, says the official statement of Turkish Central Bank.

After the unsuccessful coup attempt in Friday, the Turkish lira dropped by about 5%, and on Monday the stock market opened with sharp declines.

According to central bankers tighter monetary policy, prudent macro-prudential policies and effective use of the tools available roadmap of August 2015 have increased the resilience of the economy against shocks. Moreover Monetary Policy Committee has decided to make a measured and cautious steps towards simplification.